Arsenal boss Arsene Wenger conceded his side's title hopes could be over after their narrow defeat at Manchester City.

The Gunners were beaten 1-0 by the Premier League leaders after David Silva struck in the second half of a pulsating encounter at the Etihad Stadium.

Despite a recent charge up the table with seven wins from eight, the result left the Londoners 12 points behind City after 16 games.

Wenger said: "Unfortunately it's a game we couldn't afford to lose because it puts us too much [behind City].

"If we had won the game it would have put us six points behind and with our full-backs coming back, and (Jack) Wilshere and (Abou) Diaby, we would have a better squad in the second half of the season.

"It will be difficult to close the gap on City, but we will try. This is a game we couldn't afford to lose and that's why it's difficult to take. We will continue to fight and there are a lot of positives.

"The team has made a lot of progress since August and the team can be proud of it."

Silva struck after 53 minutes to reward City for some superb attacking play.

Sergio Aguero fired over early on before both he and Mario Balotelli brought good saves from Wojciech Szczesny.

Pablo Zabaleta later hit the post for the hosts but Arsenal had several chances themselves, most notably when Joe Hart saved from Gervinho and Aaron Ramsey in the first half and Thomas Vermaelen late on.

Robin van Persie had a strike ruled out for offside and Arsenal were also denied a penalty when the ball struck Micah Richards' arm.Wenger said: "It was a game where it could have gone both ways.

"I felt we were a bit unlucky and their keeper had a good game. I did feel at half-time we could win the game if we stayed stable at the back, but we lacked a bit of accuracy in our final ball. In the final third as well we had a few opportunities where we didn't pass the ball well."

Wenger said Van Persie was "100%" adamant over the penalty issue while the disallowed goal was unfortunate.

Wenger said: "I haven't seen it again, but we know that kind of decision can change the game. It didn't go for us and we were really unlucky with these decisions and we have to take it on the chin."

Wenger added that Johan Djourou, who left the game early in the second half with a groin injury, could be out for three weeks.